The tax authority of the United Arab Emirates (UAE) issued a clarification (VATP023) concerning value added tax (VAT) and the temporary zero-rating of VAT for certain medical equipment.

The clarification prescribes that the supply or import of certain personal protective equipment during the period from 1 September 2020 to 28 February 2021 and used for protection from the coronavirus (COVID-19) disease is considered to be medical equipment subject to VAT at a zero-rate (0%). Eligible medical equipment is limited to the following items:

• Medical face masks
• Half-filtered face masks
• Non-medical “community” face masks (made from textile)
• Single-use gloves
• Chemical disinfectants and antiseptics intended for use on the human body (but excluding detergents, cosmetics, and personal care products)

A supply or import outside the “specified period” (before 1 September 2020 or after 28 February 2021) is subject to VAT at a rate of 5% (under the general VAT rules).

The application of the VAT zero-rating is effective retroactively from 1 September 2020. In situations when a supplier is aware of the identity of a recipient of eligible equipment, a tax credit note is to be issued and delivered to the recipient in order to allow for a refund of any VAT overcharged on the supply of the eligible equipment during the relevant period. If the recipient cannot be identified, the supplier is to report, and remit collected VAT amounts to the tax authority.

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